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Adding Intelligence To A Wine Bottle

The Pristine Solutions desk at Skydeck, UC Berkeley’s incubator, is unlike that of other startups. In addition to the team’s laptops, the Pristine Solutions desk has a rack that contains five bottles of wine. For most startups, wine bottles signal celebration (or, depression, if they are consumed in large quantities). For Nedda Bakhshi and Vik Thairani, two of the four co-founders of the startup, those bottles are business.

It would be ideal if that business was related to wine sampling and rating, which is what most wine apps in the market do anyway. However, Thairani and Bakhshi have a different spin on an old problem and industry. Their product – a temperature sensor tag and app – makes wine bottles intelligent.

The sensor tag informs consumers about the state of their wine and an app, which contains a web dashboard and a QR code, enables winemakers to measure consumer engagement and prevent counterfeiting and brand duplication.

“We want to own the lifecycle of that bottle of wine,” says Thairani.

The Case For The Wine Startup

In a tech-obsessed world that is replete with productivity and business apps, social networks, and big data, wines seem like an odd (and, certainly, enjoyable) choice for a startup.

Thairani and his friends came up with the idea for the app while participating in a business plan competition at UC Berkeley. “We were looking for an industry with lots of confusion, brand fragmentation, repeat purchases and high price points,” says the thirty-three-year-old Haas School of Business graduate. Naturally, the wine industry was a perfect fit for these characteristics.

The industry’s three-tier distribution model splinters engagement between consumers and wine producers. In some cases, this lack of engagement can have serious consequences to product quality.

This is because wines are unique products that are sensitive to changes in temperature and pressure. Unlike other temperature-sensitive products in the market, however, wine bottles do not come with explicit storage instructions on the label. As a result, exposure to less than ideal conditions can potentially spoil a bottle of wine without the end consumer being aware of the actual reasons. As Thairani puts it, approximately $1 billion of wine goes bad in the United States on a yearly basis.

Adding Intelligence To A Bottle Of Wine

Pristine Solution’s temperature sensor tag informs consumers about ideal conditions to store a bottle of wine. A bar on the sensor tag changes color to blue after being exposed to a preset temperature threshold (provided by the winemaker) for over 18 hours. According to Bakhshi, the threshold can be customized to different temperatures, depending on the type and quality of wine.

It is tempting to conclude that the color change is an indication of the wine’s expiration date. That conclusion, however, is incorrect. “You can still drink the wine and but drink it fast!,” says Bakhshi, who worked in the wine industry for six years before co-founding Pristine.

Given the broad applications of temperature sensor tags in other industries, use cases for Pristine’s technology can vary across industries. According to Bernt Wahl, executive-in-residence at Skydeck, the startup’s technology is ideally suited for transportation of vaccines to remote areas in Africa. However, barriers to entry in the pharmaceutical industry and absence of funding for a project of this scale dissuaded the Pristine team from working in this space.

The team has also skirted the typical wine rating and education app route for the wine industry. Instead, they have opted for an end-to-end approach. This means that Pristine also provides an app that measures consumer engagement as well as a custom QR codes, which take consumers to a mobile-optimized site after scanning. Thairani says their algorithms marry duplication and counterfeiting technology with the cloud. For example, winemakers can detect instances of counterfeiting across geographies by simply scanning QR codes stuck on their bottles.

It took Thairani and his friends over a year to assemble the technology for their app. In June this year, their startup won $100,000 funding

Three of the four Pristine co-founders

from www.founder.org, a Palo Alto-based non-profit.

Thairani and his friends started off with the idea for an electronic device to implement their technology. However, they ruled it out after estimating production costs associated with manufacturing a hardware device as well as the prospect of a limited battery life.

Pristine tags set winemakers back by approximately $1 per bottle. For wineries that do not produce a large number of cases, this price point has the potential to increase operational expenses.

However, Thairani makes the case for a positive return on investment for makers based on their app. That ROI can take the form of increased customer confidence in their wine or potential for repeat sales through a custom app that tracks the consumer’s wine purchases. He frames their app as one that “protects the brand” by adding intelligence to the wine bottle.

An Industry Adapting To Technology

That intelligence, however, is yet to take roots in the wine industry. Revenues that are in excess of $4 billion and a growth rate that outpaces the rate for the alcohol beverage industry makes the wine industry an attractive prospect for startups. However, the industry is a slow adopter of technology.

According to Shokie Lopez, vice president of Information Technology with Wente Vineyards, wine producers prefer to invest in plant property equipment as opposed to technology. “Winemakers and wineries see the value in production because that’s where they derive direct value for their product,” says the fourteen-year veteran of the industry.

IT initiatives within wineries are generally restricted to operational areas such as Enterprise Resource Planning or ERP. For example, Wente Vineyards recently concluded an initiative to reduce procurement expenses. They tracked and measured the effort. In the case of Sales and Marketing, however, it is difficult to measure returns on investment.

Instead, Lopez says their company relies on a combination of third-party data services and anecdotal information from distributors to measure customer reaction. In recent times, the company has added social media to this mix. “The footprint is broad,” says Lopez, referring to social media’s broad reach and low costs.

In contrast, mobile apps bundle multiple costs into a single structure. For example, mobile apps require hardware infrastructure, such as smartphones. In addition, apps need to be aggressively marketed and require user selection and installation from an array of choices.

According to Lopez, the advent of new pricing models (such as Software-as-a-Service) is democratizing technology use in the wine industry. “Small wineries can play in the same field as the bigger ones,” he says. Wente has also moved into the app arena with a mobile app that educates customers about its wines.

According to Thairani, the Pristine team will work with wineries to provide information about the sensor tag and app in their shipments for customers. “This is to make sure that customers can get excited about the fact that they are getting a bottle of wine in Pristine condition,” he says.

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